POLITICAL AND JUDICIAL CHECKS ON CORRUPTION: EVIDENCE FROM AMERICAN STATE GOVERNMENTS

This paper investigates the effects of checks and balances on corruption. Within a presidential system, effective separation of powers is achieved under a divided government, with the executive and legislative branches being controlled by different political parties. When government is unified, no effective separation exists even within a presidential system, but, we argue, can be partially restored by having an accountable judiciary. Our empirical findings show that a divided government and elected, rather than appointed, state supreme court judges are associated with lower corruption and, furthermore, that the effect of an accountable judiciary is stronger under a unified government, where the government cannot control itself.     

Do large cabinets favor large governments? Evidence on the fiscal commons problem for Swiss Cantons

The fiscal commons problem is one of the most prominent explanations of excessive spending in political economics. For a panel of the 26 Swiss cantons over the 1980–1998 periods, this paper explores the role of fragmented governments on fiscal policy outcomes. We distinguish between two variants of fragmented governments: cabinet size and coalition size. In addition, we analyze whether constitutional rules for executive and legislature as well as formal fiscal restraints shape the size of government and how different rules interact with fragmentation. The results indicate that the number of ministers in the cabinet is positively associated with the size of government. While fiscal referendums effectively restrict the size of government, there is also evidence that fiscal referendums relax the fiscal commons problem to some extent.     

Influencing Agencies Through Pivotal Political Institutions

We draw on the positive political theory and campaign financeliteratures to examine how interest groups allocate influenceactivities (e.g., monetary donations, lobbying) across multiplegovernment institutions when seeking more favorable agency policydecisions. By modeling agency behavior in the context of legislativeoversight, we derive testable predictions about the politicalconditions under which an interest group will influence (1)only the agency, (2) the legislature and/or executive insteadof the agency, and (3) the legislature or executive in additionto the agency in order to induce a shift in regulatory policy.One implication of our conclusions relating to (2) and (3) isthat empirical studies seeking to identify a relationship betweenelectoral campaign contributions and public policy using dataon legislative votes are potentially misspecified.     

Divided government and dominance solvability

This paper considers strategic voters who face an institutional structure in which there are two branches of the government: the executive, elected by plurality rule and the legislature, elected by proportional rule. Policy outcomes are described through a compromise between these two branches. I solve the game by relying only on purely non-cooperative behavior of individual voters. I prove the uniqueness of Nash equilibrium in the legislative subgame, where the election of the president is known. This equilibrium can be obtained by the process of iterated elimination of dominated strategies. I then solve the whole game by backward induction. The results suggest moderate behavior of voters, due to the desire to balance the plurality of a party in the presidential election by voting for the opposite party in the legislature. Similar results can be obtained in the case of reverse timing of the elections, as well as in the case where elections of the two branches of the government are simultaneous.     

The economic effects of constitutions: do budget institutions make forms of government more alike?

According to an influential theoretical argument, presidential systems tend to present smaller governments relative to parliamentary countries because the separation between those who decide the size of the fiscal purse and those who allocate it creates incentives for lower public expenditures. In practice, however, presidential and parliamentary countries come in many forms. In particular, variation in procedural rules that assign budget prerogatives across the popular branches of government may affect the underlying incentives that differentiate these types of regimes in terms of fiscal outcomes. More specifically, we argue that more hierarchical rules that concentrate budgetary power in the executive relative to the legislature do not only reduce the extent of the common pool problem but also limit the degree of separation of powers, which may have a countervailing effect. Consequently, the effect of the form of government on public expenditures is conditional on specific procedural rules. We test this hypothesis on a broad cross-section of countries and find that presidentialism has a negative impact on government size only when executive discretion in the budget process is low (that is, in a context of separation of powers). However, the negative effect of presidentialism on expenditures vanishes when the executive’s discretion over the budget process is higher. This result, in addition to highlighting that not all budget institutions have the same effect on incentives and outcomes, points out how important it is to go beyond broad characterizations of political institutions for explaining policy outcomes, and more generally, for moving forward the research agenda in constitutional political economy.     

Judicial review and the power of the executive and legislative branches

The legal system can affect what policies a government can implement. In particular, when there is separation of powers, the strength of the judiciary to review and overturn actions of the executive and legislative branches can affect such things as how much redistribution these policy-making branches can do. Surprisingly, having judicial review helps the policy-making branches—the stronger is the judiciary, the more redistribution they are able to do. This occurs because the policy-making branches must make promises on and off the equilibrium path to individuals in order to make redistribution possible. However, in many circumstances, the government wants to renege on these promises, either to do more redistribution than promised or to not carry out severe threats against any individuals who lied. Judicial review can prevent reneging on these promises, thus making them credible.We develop this in the context of an optimal income tax model with a finite number of individuals where the government knows the exact distribution of types but not which individual is of which type. In this finite model, the government can detect misrevelation by even a single individual so that an individual׳s taxes can depend not just on one׳s own actions but also on others’ actions. Piketty (JET, 1993) showed that the government could implement any full-information Pareto optimal allocation if the government could commit to its announcements, even to infeasible allocations in circumstances after some individuals misreveal. We derive the sequential equilibrium allocations when individuals reveal their types by simple announcements when feasibility on and off the equilibrium path is imposed. Increasing the degree of judicial review expands the set of achievable allocations on the full-information utility possibility frontier. We also relate the different possible legal rules to different solution concepts in game theory.     

Presidential Reputation and the Veto

This paper develops a dynamic model of the bargaining between a legislature and an executive with veto power. The dynamic nature of the model provides the executive with incentives to use the veto as a reputation building device in order to gain more favorable legislative outcomes. The model illustrates that the implicit threat of building a reputation may cause the legislature will be more accommodating in its proposals to the executive. The model illustrates the possibility of a ``honeymoon period' of legislative accommodation followed by a decline in the president's influence. This paper also explores ways in which the legislature might mitigate the effects of presidential reputation building.     

混合宪制与三权分立:现代民主的君主制与贵族制特征

立法、行政与司法三权分立理论目前仍是现代代议制民主的基础。它由孟德斯鸠创立,取代了早先的混合宪制理论。后者可以追溯至柏拉图、亚里士多德和波利比乌斯,其核心主张是,世界上存在三种宪制:君主制、寡头制和民主制,而当来自三种宪制的各种制度混合在一起时,制度之间就会相互作用,影响国家的立法、执法与司法等全部职能。文章认为,今天,孟德斯鸠的三权分立说存在太多例外,已经漏洞百出,成为理解现代民主结构的障碍而非助力。因此,有必要恢复混合宪制,从而纠正"西方国家就是纯粹的民主制"和"民主就是由人民统治"这两个流行的观念。     

Fiscal Federalism and Legislative Malapportionment: Causal Evidence from Independent but Related Natural Experiments

We exploit three natural experiments in Argentina in order to study the role of legislative malapportionment on the biased federal tax sharing scheme prevalent in the country. We do not find support to attribute it to legislative malapportionment during periods when democratic governments were in place; nor did we find any evidence that the tax sharing distribution pattern became less biased under centralized military governments. We argue that these results are at least partly attributable to two of Argentina's institutional characteristics: first, the predominance of the executive branch over the legislature (main fiscal decisions are the outcome of a bargaining process among executive authorities); and, second, the lack of any significant difference in the pattern of geographic representation in the executive branch under democratic and autocratic governments. Thus, the observed biases in the distribution of tax revenues among the Argentine provinces are not caused by legislative malapportionment, but are probably the result of a more structural equilibrium that transcends the geographic distribution of legislative representation and even the nature of the political regime. Our findings illustrate the importance of informal institutions and de facto mechanisms to study fiscal federalism in developing countries.     

Corruption and legislature size: Evidence from Brazil

This paper studies whether and how legislatures affect political corruption. Using a regression discontinuity design in the context of Brazilian municipalities, we find a positive causal impact of council size on corruption levels, as detected by random federal audits. This indicates that an extra councilor represents an additional political actor potentially interested in diverting public resources, which we define as a rent extraction effect. However, we find further evidence that, in some contexts, larger councils enhance the representation of opposition parties and effectively increase monitoring over the executive, attenuating the rent extraction effect. Namely, in municipalities where opposition parties are typically underrepresented, the additional seat in the council is absorbed by the opposition and corruption outcomes do not worsen. In addition, only in such context, mayors are more commonly sentenced for misconduct in office by judicial authorities, whose investigations anecdotally often originates from councilors denouncing mayors to local courts. Overall, our findings show that legislature size is detrimental to corruption outcomes but less so where the representation of opposition parties improves with the enlargement of the legislature.     

论人民法院对行政立法的审查

人民法院是中国的审判机关,同时也行使国家司法监督权。人民法院对行政权的监督主要是通过司法审查的形式来实现的。但目前在中国行政立法享有司法豁免权,这就使行政法治成为一句空话。从美国的司法实践来看,将中国的行政立法纳入司法审查的范围是十分必要的。要想真正实现行政法治,首先应在立法上明确规定人民法院对行政立法的司法审查权;其次要明确司法审查中人民的审查要件、审查对象及审查标准;最后要提高法院的在司法审查中的地位和司法上的独立性。     

A note on economic freedom and political ideology

Within the field of public economics, there is the perception that Republicans are associated with ‘small government’ and Democrats with ‘big government’. We test this notion by examining whether economic freedom is affected when a single party is in control of the state legislature. We find no link between party control and our main economic freedom indicator, but we do find a positive link between Republican control and the taxation component of economic freedom, suggesting a Republican legislature leads to lower taxation.     

The voter initiative and the power of the governor: evidence from campaign expenditures

Although a great deal of research examines the impact of the voter initiative process on the state legislature, the consequences for the state executive branch have been largely ignored. The voter initiative process provides the governor with a method to circumvent the legislature, which may increase the power of the governor in theory. However, it also provides citizens with a means to bypass the traditional lawmaking process and avoid the governor’s veto. This may reduce the power of the governor and lead to policies farther from the preferences of the governor. This study examines the impact of the voter initiative process on the power of the state governor by estimating total election cycle spending. Campaign expenditures are expected to reflect any sustained gain or loss in power due to the availability of the voter initiative process. The results indicate that gubernatorial campaign expenditures are significantly lower in states in which the voter initiative process is available. This finding suggests that state governors sustain a loss in political power when the voter initiative is available. Additionally, the findings imply that individuals may employ the voter initiative process as a substitute for gubernatorial support.     

Ideology and endogenous constitutions

We study a legislature where decisions are made by playing an agenda-setting game. Legislators are concerned about their electoral prospects but they are also genuinely concerned for the legislature to make the correct decision. We show that when ideological polarization is positive but not too large (and the status quo is extremely inefficient), institutions in which the executive has either no constraints (autocracy) or many constraints (unanimity) are preferable to democracies that operate under an intermediate number of constraints (simple majority rule). When instead ideological polarization is large (and the status quo is only moderately inefficient), simple majority turns out to be preferable.     

Separation of Powers and Appointee Ideology

The traditional view of appointments to executive agencies isthat the president has virtual carte blanche in the selectionof personnel for his "team." Yet many formal models of appointmentsuggest that presidents must accommodate the policy preferencesof senators when making nominations. Several empirical studieshave confirmed that legislative preferences are a significantdeterminant of the ideology of appointees, but these studieshave focused on appointments to the federal judiciary; the researchhas not addressed appointments to executive agencies. Appointmentsto executive agencies from 1936 to 1996 are examined, by employinga special sample of appointees to those positions—thosewho have served in Congress at some point in their careers.For these "bridging" individuals, it is possible to analyzestrictly comparable measures of ideology for the appointees,their nominating presidents, and the senators who voted to confirmthem. A linear regression analysis provides significant supportfor the hypothesis that appointee ideology is affected by variationin the ideological tilt in Congress.     

Lobbying and discretion

When interest groups compete to influence legislators, the resulting legislation is often vague, and thus obliges the groups to continue their fight in the executive. On its face, this seems inefficient—at least from the point of view of the groups. We explore this intuition in a model of “nested lobbying” in which interest groups first compete to influence a legislative agenda setter, then compete to influence legislative votes over the resulting agenda. If the resulting legislation grants discretion to the executive, the final prize is allocated in yet one more contest in the bureaucracy. We find that when the status quo is non-discretionary, competition over the agenda never results in an agenda that includes discretion. Surprisingly, however, a discretionary status quo can stand with probability 1 if the preferences of the bureaucracy, the legislature, and the agenda setter are arranged in an “iron triangle”. Specifically, the bureaucracy and agenda setter must be biased in favor of one group, while the legislature is biased in favor of the other.     

Democrats,republicans, and taxes: Evidence that political parties matter

I estimate the influence of political parties on state Tax Burdens over a 40-year period (1960–2000). Holding constant a large number of state and voter characteristic variables, I find that: (i) Tax Burdens are higher when Democrats control the state legislature compared to when Republicans are in control. (ii) The political party of the governor has little effect after controlling for partisan influences in the state legislature. I explain how both findings are consistent with median voter theory. My results suggest that after 5 years of Democratic control of the legislature, state government would be approximately 3–5% larger than if Republicans controlled the legislature during that same period, with the better specifications producing estimates in the higher end of this range.     

Politics,partisanship and the power to veto: does gubernatorial line-item veto power affect state budgets?

How does line-item veto (LIV) power affect a governor’s ability to structure the state budget? Is LIV power only relevant as a partisan tool? Is it still relevant when the state legislature can override the veto? We use a rich disaggregated data set to test the effect of the gubernatorial LIV on state budgets, controlling for political factors such as party affiliation of the governor and legislature, minority status of the governor, and the legislature’s ability to override a LIV. Our results suggest that LIV power has very weak influence, if any, on governors’ ability to influence state budgets.     

Where are the rent seekers?

In a remarkably simple and yet one of the most original and insightful observations of 20th century economics, Gordon Tullock pointed out that there are efficiency losses when public policies and political behavior create contestable rents. Tullock also observed that social losses from contesting rents appeared smaller than might be expected, so raising the question ‘where are the rent seekers?’ Tullock proposed that political accountability and ‘free-riding’ incentives in interest groups limit social losses from rent seeking. We affirm Tullock’s explanations, which apply differently under different political institutions. We compare Tullock with Gary Becker, who focused on deadweight losses from redistribution and concluded, in contrast to Tullock, that political redistribution is efficient. The comparison with Becker highlights the significance of the recognition of Tullock’s concept of rent seeking. By excluding rent-seeking losses from the social costs of redistribution, Becker could arrive at a conclusion more favorable than Tullock to an ideology that sees merit in extensive redistribution. Tullock’s model, although more encompassing of actual social costs of redistribution, would have been less welcome in the social democratic welfare state.